DT 99-041
BELL ATLANTIC
Special Contract with the City of Dover
Order Denying the Special Contract Without Prejudice
O R D E R N O. 23,197
April 16, 1999
On March 19, 1999, New England Telephone and Telegraph
Company d/b/a Bell Atlantic (BA-NH or the Company) filed with the
New Hampshire Public Utilities Commission (Commission), pursuant
to RSA 378:18, a petition for approval of Special Contract No.
99-4 (Special Contract) with the City of Dover. The proposed
special contract, executed on December 31, 1998, provides Centrex
line systems comprised of analog lines. Along with the
special contract, Bell Atlantic filed a contract overview and
cost study details in support of the filing.
Concurrently, Bell Atlantic filed a Motion for
Protective Order, seeking to exempt portions of the Special
Contract and supporting materials from public disclosure. The
Commission will rule on that motion separately. However, pursuant
to N.H. Admin. Rules Puc 204.06, the identified portions will be
kept confidential until the Commission rules on the motion.
Bell Atlantic's cost study avers that the special
contract's proposed rates exceed the incremental costs of the
services being provided, pursuant to the requirements of RSA
378:18-b. RSA 378:18 applies to special contracts in general and
RSA 378:18-b applies specifically to special contracts offered by
telephone utilities. Those statutes state:
378:18 Special Contracts for Service.
Nothing herein shall prevent a public utility from making a
contract for service at rates other than those fixed by its
schedules of general application, if special circumstances
exist which render such departure from the general schedules
just and consistent with the public interest and, except as
provided in RSA 378:18-b, the commission shall by order
allow such contract to take effect.
378:18-b Special Contracts; Telephone Utilities
Any special contracts for telephone utilities providing
telephone services shall be filed with the commission and
shall become effective 30 days after filing, provided the
rates are set not less than:
I. The incremental cost of the relevant service; or
II. Where the telephone utilities competitors must
purchase access from the telephone utility to
offer a competing service, the price of the lowest
cost form of access that competitors could
purchase to compete for customers with comparable
volumes of usage, plus the incremental cost of
related overhead.
Staff's review of the proposed Special Contract raises
questions as to whether the proposed rates meet the requirement
of RSA 378:18-b. The questions arise in the context of the
current evolution of the telecommunications industry to a
competitive industry after passage of the Telecommunications Act
of 1996 (TAct). BA-NH's filing follows the incremental cost
calculation methodology which was heretofore accepted as
adequate. However, as required by the Federal Communications
Commission (FCC) in implementing the TAct, the Commission must
employ a Total Element Long Run Incremental Cost (TELRIC)
methodology for calculating the costs of unbundled network
elements (UNEs) that BA-NH offers for sale to Competitive Local
Exchange Carriers (CLECs). When the rates under this contract
are compared to the TELRIC prices that Bell Atlantic has sought
our approval of in docket DE 97-171, it is not clear that the
requirements RSA 378:18-b have been met. Furthermore, there are
outstanding concerns that approval of this special contract at
the proposed rates will have the effect of being anti-competitive
and subsidized by other captive ratepayers. Accordingly, we
believe it is appropriate to move ahead with docket DT 99-018 to
explore the issues raised by Bell Atlantic's employment of an
incremental cost methodology for purposes of meeting its
obligation under RSA 378:18-b and using another methodology for
setting wholesale prices charged to competitors.
The language of RSA 378:18-b would have this Special
Contract go into effect 30 days from filing if the conditions set
forth therein are present. Because we are unable to determine at
this juncture the appropriate "incremental cost" as that term is
used in RSA 378:18-b, we will deny the Petition without
prejudice. Bell Atlantic may refile the petition after
resolution of the question outlined above. In addition, if the
outcome of the separate investigation supports Bell Atlantic's
position, we will consider making this Special Contract, refiled
after such resolution, effective 30 days from March 19, 1999, the
date of the original filing.
Based upon the foregoing, it is hereby
ORDERED, that Bell Atlantic's petition for approval of
the Special Contract is hereby DENIED without prejudice.
By order of the Public Utilities Commission of New
Hampshire this sixteenth day of April, 1999.
Douglas L. Patch Susan S. Geiger Nancy Brockway
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary